Beyond its direct bilateral efforts, the United States recognizes the importance of the Multilateral Development Banks (MDBs) in promoting economic growth and poverty reduction in the poorest countries. That is why the President has proposed a vigorous growth agenda to make these institutions more effective in raising standards.

Grants. Last June President Bush called on the World Bank and other development banks to provide up to 50 percent of their assistance to the poorest countries in the form of grants. This proposal recognizes that it is time to "stop the debt" for the poorest countries, especially for such urgent priorities as basic education, health care, and clean water that do not generate the revenues necessary to service loans. Many poor countries and development experts have recognized the importance of this proposal:

Over 20 African nations -- from Benin to Tanzania -- have indicated their support for increased grants.

Groups as diverse as the AFL-CIO, Catholic Relief Services, Friends of the Earth, the Heritage Foundation, and Oxfam have also voiced support.

Performance-Based Replenishment. The United States has also proposed a performance-based financing framework for its contribution to the International Development Association (IDA) -- the component of the World Bank that provides assistance to the poorest countries. In addition to the funds announced today:

To demonstrate his commitment to these proposals and to these institutions, the President's budget requests an 18 percent increase for IDA over the next three years -- equivalent to a pledge of $2.85 billion -- if the World Bank demonstrates it can use the funds to achieve measurable results.

The President's budget also includes an 18 percent increase to the African Development Bank's fund to assist the poorest -- by far, the largest increase among the major donors.